How to Make and Lose $2 000 000 Day Trading — the Story of Kyle Eschenroeder

This article is a list of tricks provided to fellow traders by Kyle Eschenroeder, an ex-professional speculator and the man who has witnessed his friend win and lose $2.000.000 day trading. Why it may be useful for you to learn from him? Well, there are two reasons for that. 1) At one point of his life Kyle was trading successfully. 2) He is not selling you anything, be it indicators or particular strategies, this man is simply sharing his knowledge.

According to Kyle, one of his colleagues has turned $30,000 into $2,000,000 in three months only to lose everything two months later utilizing principles listed below. Whether to apply them or not, is up to you. Yet, an intelligent investor is never reluctant to learn from a fellow trader.

In his article, Kyle goes into much detail about one particular trading system that he used back in the days when he was a trader. Yet, it might be too risky to follow his strategy to the letter and here is why: 1) it was made public and therefore compromised, 2) as you will see later, every trader is encouraged to create a trading system of his own.

Here is a set of rules that might guide and help you in your trading pursuit.

What not to do

1. First is to learn what things not to do. Why? Because when you run out of money, your trading journey will come to an abrupt end. Ultimately, you do not want to risk real money before you know what trading really is, as it is the easiest way to lose your entire trading capital.

2. Also, do not trade without a proper trading system. It may (and most probably will) take some time to come up with one, yet it is totally worth the effort. According to Kyle, one month of profitable trading with good payouts is enough to prove the system. However, you should take into account psychological differences between trading on demo and real accounts when making the transition.

3. Do not trade when you are emotional. You have probably already heard this before. Yet, it is arguably the most important piece of information you can get on trading. You make good choices when you keep calm and cool-headed. You make wrong choices when you are excited or scared. Your trading decisions should come from your trading system (numbers, rules), not your judgement.

Creating the system

In order to create a good system, you will have to take care of the following:

Offense. This point has to do with when and how you open the deals. In other words, under what conditions will you consider a long or a short position. Remember that your gut feeling is not an indication of an upcoming lucrative trading opportunity. You should rather use signals provided by your trading system.

Defense. This point is probably even more important than the previous one. Stop losses can be used to help you manage your losses and improve your trading strategies in the long run. It also defines how much loss you are ready to sustain in one sitting. Kyle says it is wise to use 1% of your trading capital or less.

Indicators. What and how many indicators to use. The most important rule here is “don’t overcomplicate”. A simple system with as little indicators as possible (alternatively, with no indicators at all) is easier to work with than an overcomplicated monstrosity.

One more thing to avoid

There are certain things you might want to avoid. In his article, Kyle underlines that it can be detrimental to trade using a third-party trading system or a newsletter. Instead, turn to your knowledge and skill.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
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